Vol 3, Issue 6. Quarter 1 – 2026.

According to the National Institute for Retirement Security (NIRS), “The average American worker has less than $1,000 saved for retirement.”  If you want to be more precise, the number they come up with is $955. This is reported in bold print by both the so-called left and the so-called right. (See CNBC and Fox News.) If you look at the source just a bit more deeply you will find that the NIRS works for and is fully funded by the defined benefit pensions industry. Their job is to convince you that all is lost, and you are utterly doomed if you do not fight as hard as possible to get your employer to set up a pension program for you. I wonder if the identity of the people that pay you has any effect on how you see the world?

Consider a very small bit of history. In 2020 the NIRS claimed that “A plurality of older Americans, 40.2%, only receive income from Social Security in retirement.” This claim seems to be a slight contradiction from the fact that the Social Security Administration reports that this figure was actually about 4.5%.

In 2016 NIRS claimed that public sector pension benefits stimulated the economy by creating $1.2 trillion in economic output along with 7.1 million jobs. This ignores the fact that the taxes that fund the benefits had to come from someplace. The money channeled to these retirees came from current workers today and the retirees yesterday. In other words, the money “added” to the economy is money that  is also “subtracted” from the economy at the same time. Moving  money from the left hand to the right hand, is not a net increase in total money.  Thus, this transfer had to also subtract about $1.2 trillion in economic output.

But $955 is Really Low – Right?

Absolutely – but let’s look a little closer. Let’s start with the simplest piece of this word-salad – “The average American worker”. The word “average” is interesting here. According to the Federal Reserve Board, total assets held in retirement plans today is roughly $49 trillion. (This figure was $11 trillion back in 1990.) Since there are about 235.5 million adults in the US (some of whom are currently not working), this is an average of at least $186,000 per American worker. To be fair, NIRS did not mean that the average amount was $955. What they meant was that if we rank everyone in the country from lowest retirement savings ($0) to the highest, the person in the middle has $955. This is a median. Some people like to use the word “average” when they mean median, because it sounds a lot scarier, but I am sure that this was not their intent.

A former administrator from the Social Security Administration named Andrew Biggs dug into this just a bit more and made a few small adjustments. He dropped people from the analysis who have no wages or salaries on the assumption that people with no wages or salaries cannot be expected to put part of their wages or salaries into a retirement account. He also argues that people just beginning to work should not be expected to have put anything into a retirement account yet, and that people with very low incomes cannot reasonably be expected to make such contributions. In addition, he drops people with sizable pension plans on the basis that they are not likely to need another retirement account. After these adjustments he finds that the median account balance rises to $70,000. Is that enough to live off of (in addition to SSI payments) – probably not, but it’s quite a bit different from $955. Let’s also note that this is the median among all workers. Those closer to retirement will have a lot more, and those just starting out will have less.

If the median age of a worker is about 35 and he/she/they have $70K in the account, what happens if that amount doubles every 10 years? At ages 45, 55, and 65, they would have $140K, $280K, and $560K. This is in addition to any contributions made after age 35. It that a crisis? Probably not.

In another famous piece of “research” Fidelity investments created a model to say where Retirement Savings should be at every worker age. They assume that every person begins saving 10% of their income from the first moment of work and continues this until retirement. Consequently, anyone who does not start saving immediately upon starting their first job is always “behind” in their savings plan. As a result, they find the shocking result that:

For the median respondent, no one is at or above their savings target. Regardless of gender, race, education, or age, zero percent of median respondents have either DC plan retirement wealth or net worth that is at or above their age-based savings target. Table 3 shows that across all respondents, the median amount of DC plan retirement wealth as a percentage of the savings target is four percent.

Here is a harsh lesson for current and future researchers. When you create a metric that every group fails to meet, and the average is only 4% of what you claim it should be, there are at least 2 possible explanations. One is that everyone is dumber than you are, and fails to see the sheer genius of your great metric. The other is that your metric is simply not very good because it doesn’t reflect what people actually do. When you set the “savings target” and no one meets it, maybe it’s time to make the target a more realistic value.

Here are a few additional factoids. Retirement savings have reached record high levels in every age, income, education, and race/ethnic group. This remains true when the data are viewed on a per-capita basis, and when adjusted for inflation. Poverty rates among older adults and self-reported financial security has risen dramatically and is HIGHER than it is among working age Americans. Let me repeat that. The poverty rate among retirees is lower than it is among workers. This suggests that there is a major problem – but the rate of retirement savings isn’t it.

Does this mean that I am right, and the fine folks at NIRS or Fidelity Investments are all wrong – of course not. All that I am claiming is that incentives work. When you have an incentive to interpret data in a way that leads people to pay you money, or support your cause, you have a noticeable tendency to do so. That’s just the way that human beings work. That is one reason that this site has NEVER asked for a dime, and any administrative costs for our operation are borne by the site administrators: i.e. ME!!! That doesn’t guarantee that I am always honest – just that I do not get paid to be anything else. That is a fact that you may want to keep in mind.